INSIGHT: Energy sector contests Obama’s state of the union

27 January 2011 17:13[Source: ICIS news]

By Joe Kamalick

WASHINGTON (ICIS)--US energy industry officials and members of Congress were harsh in their assessment of President Barack Obama’s promise this week of changes designed to “win the future”, charging that he was reverting to failed policies of the past.

In his annual address to Congress on Tuesday, Obama called for new government spending on biomedical research, information technology “and especially clean-energy technology” to help spur employment.

To pay for that new spending, Obama said, “I’m asking Congress to eliminate the billions in taxpayer dollars we currently give to oil companies”.

The National Petrochemical and Refiners Association (NPRA) charged that Obama was trying to vilify the nation’s petroleum producers and refiners.

“If his attack demonizing the petroleum industry succeeds, it will destroy jobs instead of creating them,” said NPRA President Charles Drevna.

He said that in singling out the oil industry for higher taxes, the president would only succeed in “raising costs for consumers instead of lowering them, and require billions in taxpayer dollars to fund unending subsidies for untested technologies unable to survive on their own”.

“It makes no sense to destroy existing jobs held by hard-working Americans today in hopes of creating new jobs that may never materialise tomorrow,” Drevna added.

“Throughout history, government efforts to create economic winners and losers - no matter how well-intentioned - have been disappointments,” he said.“We need to grow our economy and increase the number of jobs, not simply try to shift jobs from one sector to another.”

Jack Gerard, president of the American Petroleum Institute (API) termed the president’s remarks “unfortunate” and challenged Obama’s suggestion that oil producers get special treatment under US tax laws.

“The US oil and natural gas industry pays taxes at effective rates far higher than most other industries,” Gerard said.

He noted too that the nation’s energy producers “do not receive payments from the government to support oil and gas development”, a reference to federal subsidies and tariffs that support US biofuels manufacturing.

Gerard said that the taxpayer dollars that Obama described as being given to oil companies are the same tax deductions provided to other industries to encourage energy production and new jobs.

“It’s unfortunate that the administration seems poised to stifle what remains one of America’s strongest job creating industries,” Gerard said.

“The president focused on job growth through federal spending,” Gerard said, adding, “But he was silent on one of the best ways to create jobs: allow more energy development.”

Gerard said that in last November’s national elections, “The American people spoke loud and clear and directed the president and the new Congress to focus on one main issue = job creation”.

But in his state of the union speech, said Gerard, the president “missed an opportunity to highlight real job creation and economic recovery opportunities”.

Thomas Pyle, president of the energy industry-funded Institute for Energy Research (IER) charged that the Obama administration’s own policies and restrictions were impeding US energy development and employment growth.

“The president continues to talk about how America needs to become more competitive,” Pyle said.“But this administration’s plans do nothing but hurt our ability to compete.”

“We don’t have a competitiveness problem, an innovation problem or a resource availability problem,” he said, “we have a government problem.”

“We have the ability to produce nuclear power, but can’t get a permit to build a plant,” Pyle said. “We have the world’s largest coal supplies, but the administration is halting construction on even the cleanest plants.”

“We have vast resources offshore, but 97% of our ocean energy lands are not leased for oil and gas production,” he added. “We have enough oil shale to free us from any imports, but his administration stopped development.”

“If the president and his government will just get out of the way, our energy problems might not be solved, but it’d certainly be an improvement,” Pyle said.

Republican leaders in Congress who will have legislative and oversight authority over the Obama administration’s energy policies also were quick to contrast the president’s promises and goals with his actions.

“However, it’s the spending and job-destroying policies of his administration that are jeopardising our economic future,” Hastings said.

“The president needs to embrace a robust plan to produce all types of American energy - from renewables to American oil and natural gas = and it has to be done without harmful government subsidies or unrealistic mandates,” he added.

Hall also said that the president’s plan to focus new federal research and development (R&D) spending on clean energy technologies “suggests an emphasis not on basic research but on commercialisation”.“These are activities best left to the private sector.”

Sterling Burnett, a senior energy analyst at conservative think-tank National Center for Policy Analysis (NCPA), warned that the administration’s efforts to side-line or restrict traditional hydrocarbon energy resources in order to channel funding to alternative technologies that otherwise would not survive, will end badly for both.

“If Washington continues to politically direct or ‘incentivise’ technology research and development, we will continue to suffocate new ideas and fall further behind our competitors,” he said.

Burnett cited Thomas Jefferson, principal author of the Declaration of Independence and third US president.

“Were we directed from Washington when to sow and when to reap, we should soon want bread,” Jefferson wrote in his 1821 autobiography.

Of Jefferson’s advice, said Burnett, “What was true about government involvement in agriculture then is even more true about energy policy today.”